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pikachu20040
21.09.2019 •
Business
Acity government has approved the construction of an $800 million sports arena. up to $480 million will be raised by selling bonds that pay simple interest at a rate of 4% annually. the remaining amount (up to $640 million) will be obtained by borrowing money from an insurance company at a simple interest rate of 2%. determine whether the arena can be financed so that the annual interest is $22 million. (if there is no solution, enter no solution.)
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Ответ:
borrowing structure:
500 insruance at 2%
300 bonds at 4%
weighted average rate: 2.75%
Explanation:
we will calculate which rate generates an interes texpense of 22 million per year:
22,000,000 / 800,000,000 = 0,0025 = 2.75%
we need a weighted average rate for 2.75%
we construct an equation system:
insurnace company = 800 - bonds
we now solve for bond quantity:
B = 6/0.02 = 300
now we got bonds borring we calcualte for insurance borrowing:
800 - 300 = 500 million
we check:
300,000,000 x 0.04 = 12,000,000 interest
500,000,000 x 0.02 = 10,000,000 interest
total 22,000,000 interest
Ответ:
Hello good evening friend